The stock of U.S. pharmaceutical company Eli Lilly (LLY) is down 2% on news that Canada has become the first G7 country to approve a generic weight-loss drug.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Specifically, Health Canada has approved a generic version of the Ozempic weight-loss drug made by Danish pharmaceutical giant, and Eli Lilly rival, Novo Nordisk (NVO). That makes Canada the first Group of Seven (G7) country to authorize a generic weight-loss medication after Ozempic’s patent expired.
While the generic drug approval doesn’t impact Eli Lilly’s weight-loss medications that include Zepbound and Foundayo, the company’s stock is falling as analysts warn of a coming wave of competition from cheaper generic versions of obesity pills and injections. NVO stock is down 3% on the news.
Cheaper Drugs from India
The generic version of Ozempic, an injectable GLP-1 weight-loss drug, is manufactured in India and is also approved for the treatment of Type 2 diabetes. The Canadian Pharmaceutical Alliance estimates that the generic version of Ozempic will cost 75% to 85% less than the brand name version.
While Eli Lilly’s weight-loss medications remain under patent protection for the time being, many consumers are nevertheless expected to seek out cheaper generic versions of Ozempic, potentially denting sales of products such as Zepbound and Foundayo.
Is LLY Stock a Buy?
The stock of Eli Lilly has a consensus Strong Buy rating among 19 Wall Street analysts. That rating is based on 16 Buy, two Hold, and one Sell recommendations issued in the last three months. The average LLY price target of $1,247.38 implies 31.53% upside from current levels.
